Fortuna on a Roman denarius



Published by McGraw-Hill 1944,
reprinted 1998.
Purchase Book On-line

Global Investing Book Review
August 1998

By Vivian

"World Commodities and World Currencies, by Benjamin Graham (McGraw-Hill, 1944) was reissued with an introduction by his protégé, our subscriber Irving Kahn ($39.95), the International Monetary Fund was never given the powers Graham advocated. He wanted it to finance international multi-commodity buffer stocks which would be bought and sold automatically; and to monetize what was in these pools to back paper money as gold did in 1944 with a commodity reserve currency.

Curiously enough, Graham's views - called "groceries first" - garnered support from economists as divergent as von Hayek and Lord Keynes. the U.S. Congress defeated the Havana Treaty setting up the International Trade Organization which might have done some of this. Then as the Cold War began, the deadly association of Graham's ideas with such characters as Harry Dexter White and Henry A. Wallace killed the project.

Had Ben Graham been listened to, instead of tapping the Exchange Stabilization Fudn surreptitiously or fighting off the anti-abortion clowns to finance the IMF handling crises - what is happening today - the U.S. would have a stabilizer in place to refloat emerging markets. Had Graham been listened to, the world would have been spared the rise and later collapse of cartels like OPEC, the aluminium pool, the tea and coffee stabilization plans, the World Tin Agreement. Because they dealt only with a single raw material on behalf of price gougers or producers rather than the world at large, the cartels broke.

Kahn's introduction is hampered by some ridiculous remarks about the rise of women making this soft and people-oriented program more acceptable. But he points out that had there been liquid reserves in the form of commodity backing to the southeast Asian currencies a year ago, they would not have gone into free fall. The IMF tool kit is insufficient, and it is arguable that something like what Graham proposed could do the trick."

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